NCCI Responds to Charge of High Prices for Rate
Filings

Dear Editor:

Will Peacock's letter to the editor that was recently printed
in the May AR was so laden with inaccuracies and omissions
that I felt it was imperative to set the record straight. For
example, Mr. Peacock asserts that he requested four rate filings
from the National Council on Compensation Insurance, Inc. (NCCI)
and was quoted a price that he felt was too high. What he fails
to note, however, is the fact that he has refused to provide information
that would enable NCCI to license the use of the filings at a
price that is commensurate with his intended use of the products.
Furthermore, he also neglects to point out that he is a competitor
of NCCI who clearly seeks to make use of this valuable product
for commercial purposes. Perhaps Mr. Peacock does not feel he
should bear the fair costs of his use of NCCI's intellectual property,
but believes he should be subsidized by NCCI's member companies.

Contrary to the inferences raised by Mr. Peacock in his letter,
the price charged by NCCI for the licensed use of rate filings
by outside consultants is rational and appropriate. For example,
an actuarial consulting firm doing work on behalf of an NCCI affiliate
may be licensed to use the related rate filing, at no additional
charge, and will be asked to protect the filing from additional
distribution. Alternatively, if a consultant wishes to use a filing
on behalf of an insurer that is not an NCCI affiliate, the consultant
is charged a premium based charge that is the same as that charged
an NCCI affiliate plus 25 percent. The difference reflects the
lack of affiliate investment and commitment that non-affiliates
do not provide to NCCI. Only if the consultant refuses to disclose
the intended use of the rate filing will NCCI charge the consultant
a fee based on the premium of the affiliate with the highest premium
in that state plus a 10 percent administrative fee. In the instant
case, Mr. Peacock has refused to disclose his intended use of
this valuable intellectual property.

Mr. Peacock also goes to great lengths to deny the existence of
NCCI's intellectual property - somehow inferring that these valuable
property rights don't exist because of regulatory and actuarial
involvement in the ratemaking process. Apparently Mr. Peacock
does not understand federal copyright law, but he also fails to
recognize that the loss cost filings prepared by NCCI represent
the culmination of substantial investments in technology, countless
hours of human effort, and the application of techniques developed
over many years at great expense. It should also be noted that
Mr. Peacock ignored the fact that the Florida court decision was
a response to a motion to dismiss and is currently on appeal to
the Circuit Court of Appeals.

Finally, Mr. Peacock incorrectly suggests that NCCI has not made
necessary data available when, in fact, a myriad of data products
are offered to our members and customers at reasonable prices.
For example, our actuarial customers regularly purchase the highly
valued NCCI Annual Statistical Bulletin, Economic Conditions Report,
Schedule Z Summary Data, Circular Services, and other key data
products and services. Unlike Mr. Peacock, our customers' responses
to these products are overwhelmingly positive and negative comments
on our pricing are infrequent. Interestingly, when we have asked
Mr. Peacock if some of the products identified above might be
appropriate for his professional needs (in lieu of the full rate
filing), he has failed to respond.

NCCI welcomes competition and we believe we have made many efforts
to accommodate Mr. Peacock and his business needs, despite the
fact that he is a competitor of NCCI and our affiliates. As a
result, we are perplexed by his continuing written diatribe against
NCCI. NCCI is not a governmental entity. NCCI is a not-for-profit
corporation, owned by affiliate members who have agreed to support
the organization through financial support and data contributions.
NCCI's affiliates have embraced competition, but they are not
willing to subsidize their competitors or others who are unwilling
to pay the contributive costs of doing business. Although Mr.
Peacock indicates that he is willing to pay a reasonable price
for NCCI's products and services, in fact it appears that what
he really wants is either free or subsidized access to products
and services that are not only valuable intellectual property,
but are costly to produce. We don't think that's appropriate or
fair.William D. Hager
Chief Executive Officer, NCCI

[Editor's note: Look for more discussion between Will Peacock
and the NCCI in the November AR.]